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About Corporate & Commercial Law in Asunción, Paraguay
Corporate & Commercial law in Asunción, Paraguay refers to the legal frameworks and regulations that govern the formation, operation, and dissolution of businesses, as well as commercial transactions in the city and the country. From small startups to multinational corporations, these laws regulate mergers, acquisitions, contracts, corporate governance, and compliance requirements. Asunción is Paraguay’s economic hub, and its commercial laws are designed to encourage both local and international investment while ensuring that businesses operate fairly and transparently in the marketplace.
Why You May Need a Lawyer
There are several situations where an individual or a business might require legal assistance in corporate and commercial matters in Asunción. Typical reasons include:
- Establishing a new company, including choosing the right corporate structure (such as Sociedad Anónima or Sociedad de Responsabilidad Limitada).
- Drafting, reviewing, or negotiating commercial contracts with local or international partners.
- Assisting with mergers, acquisitions, or joint ventures, ensuring compliance with national laws.
- Dealing with shareholder disputes or corporate governance issues.
- Navigating regulatory compliance, tax obligations, and proper licensing for businesses operating in Paraguay.
- Handling liquidation or dissolution of companies.
- Managing intellectual property protection for products, brands, or inventions.
- Resolving disputes with suppliers, customers, or other businesses.
- Advising on labor and employment issues within companies.
- Ensuring full compliance with Paraguay’s anti-money laundering and anti-corruption norms.
Local Laws Overview
Corporate and commercial activities in Asunción are primarily governed by the Paraguayan Civil Code, Commercial Code, Law 388/94 (related to companies), the Securities Law, and other specific regulations. Some of the key legal aspects include:
- Company Types: Common structures include the Sociedad Anónima (SA), Sociedad de Responsabilidad Limitada (SRL), and branches of foreign companies. Each type has specific requirements for incorporation, governance, and liability.
- Registration Requirements: Companies must be registered with the Public Registry of Commerce (Registro Público de Comercio) and the Internal Revenue Service (Subsecretaría de Estado de Tributación) for tax purposes.
- Corporate Governance: The law sets out requirements for shareholder meetings, board of directors, statutory auditors, and disclosure obligations.
- Foreign Investment: Paraguay encourages foreign investment, allowing 100 percent foreign ownership and offering investment incentives, but investors must comply with local regulations and reporting.
- Contracts: Contracts can usually be drafted freely, subject to public policy and certain statutory restrictions. Written contracts are recommended for commercial certainty.
- Dispute Resolution: Commercial disputes can be resolved through Paraguayan courts or via arbitration, which is recognized and enforceable under local law.
- Taxation: Companies are subject to corporate income tax, value added tax (VAT), and other fiscal obligations. Tax compliance is monitored by the Ministry of Finance and SET.
- Anti-Money Laundering & Anti-Corruption: Companies must comply with strict controls imposed by the Secretariat for the Prevention of Money Laundering (SEPRELAD).
Frequently Asked Questions
What are the most common types of companies in Paraguay?
The Sociedad Anónima (SA) and the Sociedad de Responsabilidad Limitada (SRL) are the two most popular legal structures for businesses in Paraguay. The SA is ideal for larger enterprises with many shareholders, while the SRL is common for small and medium-sized businesses.
Can foreigners fully own a company in Asunción?
Yes, Paraguay allows foreign individuals and entities to own up to 100 percent of a local company, with the same rights as local investors, subject to certain sector-specific restrictions.
What is the process to register a company in Asunción?
The process includes selecting a company name, drafting and notarizing the bylaws, registering with the Public Registry of Commerce, obtaining a tax identification number, and meeting any special sectoral licensing requirements.
How long does it take to set up a company?
Company registration typically takes between four and eight weeks, depending on the type of company and the completeness of submitted documentation.
Do I need to have a local partner to start a business in Paraguay?
No, there is no general requirement for a local partner except in certain regulated industries where local participation may be required.
Are shareholder agreements legally binding?
Yes, shareholder agreements are legally recognized and enforceable in Paraguay, provided they do not conflict with mandatory legal provisions or public policy.
Is there a minimum capital requirement for company formation?
Yes, minimum capital requirements apply and vary depending on the company type. For example, for an SA, the minimum is equivalent to around USD 10,000, while SRL requirements are lower and more flexible.
How can commercial disputes be resolved?
Disputes can be resolved through local courts or, if agreed by the parties, through arbitration. Paraguay is a signatory to the New York Convention, making foreign arbitral awards generally enforceable.
What is the role of the statutory auditor or Sindico?
Certain companies, such as SAs, are required to appoint a Sindico to oversee compliance with corporate law, review financial statements, and report on any irregularities to shareholders.
What are the main tax obligations for companies?
Companies must register with the tax authority (SET), file regular tax returns, pay corporate income tax, VAT, and withhold taxes on employee salaries and certain payments to third parties.
Additional Resources
The following agencies and entities can provide further information or assistance regarding corporate and commercial matters in Asunción, Paraguay:
- Ministry of Industry and Commerce (MIC): The main body for oversight and regulation of commercial activities in Paraguay.
- Public Registry of Commerce (Registro Público de Comercio): Responsible for company registrations and filings.
- Subsecretaría de Estado de Tributación (SET): National tax authority overseeing all company tax matters.
- Chamber of Commerce and Industry (Cámara de Comercio y Servicios de Paraguay): Industry group offering guidance and support for businesses.
- Embassies and Consulates: For foreign investors, diplomatic missions can offer help navigating legal and regulatory requirements.
- Paraguayan Bar Association: Provides directories of licensed lawyers and law firms specializing in corporate and commercial law.
Next Steps
If you need legal assistance in corporate and commercial matters in Asunción, consider these practical steps:
- Clearly define your business objective or the legal issue you are facing.
- Gather all relevant documentation, such as business plans, contracts, licenses, and identification papers.
- Research and select a lawyer or law firm with experience in corporate and commercial law in Paraguay.
- Schedule an initial consultation to get a clear assessment of your legal options and an estimated timeline and budget.
- Follow your lawyer’s guidance on compliance, deadlines, and ongoing business management to avoid legal pitfalls.
- If relevant, contact local business support organizations or chambers of commerce for further guidance and networking opportunities.
Taking a proactive approach and securing professional legal help will ensure that your business interests in Asunción are well-protected and compliant with all legal requirements.
Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation. We disclaim all liability for actions taken or not taken based on the content of this page. If you believe any information is incorrect or outdated, please contact us, and we will review and update it where appropriate.